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On the Stability of the Implicit Prices of Housing Attributes: A Dynamic Theory and Some Evidence

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  • Charles Ka Yui Leung

    ()
    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

  • Kelvin Siu Kei Wong

    ()
    (Department of Real Estate and Construction, The University of Hong Kong, Pokfulam, Hong Kong)

  • Patrick Wai Yin Cheung

    ()
    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

Abstract

Given the dramatic fluctuations in aggregate housing prices, this paper attempts to examine whether the implicit prices of different housing attributes are “stable.” Theoretically, this paper provides perhaps the first dynamic, general equilibrium model in which housing attributes’ implicit prices fluctuate. Empirically, this paper models the time paths of different implicit prices as auto-regressive processes by employing a hedonic pricing model on a large set of housing transaction data over a relatively long period of time. An endogenous structural break test is then performed. Except for a few attributes, structural breaks are not detected. Directions for future research are discussed.

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Bibliographic Info

Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 10 (2007)
Issue (Month): 2 ()
Pages: 66-93

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Handle: RePEc:ire:issued:v:10:n:02:2007:p:66-93

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Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Web page: http://www.asres.org/

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Related research

Keywords: hedonic pricing; structural break; evolution of valuation; housing attributes;

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References

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Citations

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Cited by:
  1. Charles Ka Yui Leung & Patrick Wai Yin Cheung & Edward Chi Ho Tang, 2013. "Financial Crisis and the Co-movements of Housing Sub-markets: Do relationships change after a crisis?," International Real Estate Review, Asian Real Estate Society, vol. 16(1), pages 68-118.
  2. Leung, Charles Ka Yui & Ma, Wai Yip & Zhang, Jun, 2013. "The Market Valuation of Interior Design and Developers strategies: a simple Theory and some Evidence," MPRA Paper 43896, University Library of Munich, Germany.
  3. Leung, Charles Ka Yui & Tang, Edward Chi Ho, 2013. "Speculating China economic growth through Hong Kong? Evidence from the stock market IPO and real estate markets," MPRA Paper 46346, University Library of Munich, Germany.

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